“Our target for 2008 is to become a global giant”

Oğuz N. Özgen is general manager of Erdemir, a company which is always on the agenda,... Özgen has been working at Erdemir for 25 years and made the following comment on the acquisition by Oyak: “We became free, autonomous and concentrated on our business”. He explains that after the takeover they completely reorganized the company and established a profit-focused structure. “Our primary target was to cross the bridge in one piece. When our investments are completed in 2008 we shall be in a position to put pressure on every company and every country in the world in terms of tonnage, technology and output.”

The largest iron and steel company in Turkey was acquired by the Oyak Group through privatization program on 27 February 2006. In the 10 months since it was taken over the Oyak Group the company has really taken off. The company increased its profits 3.5 fold in 2006 compared with the previous year and quadrupled its basic operating profit over the same period. The company broke its production record in 2006, and broke its savings record with US $110 million. In 2006 it spent US$132 million on 41 projects at Erdemir and US $541 million on 43 projects at İsdemir.

This process was managed by the Erdemir General Manager Oğuz Özgen. Özgen began his career as an intern engineer at Erdemir and he has witnessed everything that has occurred at the company over the last 25 years. Özgen says that they have felt freer since the acquisition by Oyak and that the most radical change is that the company has become autonomous.

Erdemir General Manager and Board Member Oğuz N. Özgen is this month’s guest in the CEO’s room. He explained what has happened and the changes at the company over the last ten months and its targets for the future.

* People are describing Erdemir as a newly born global giant. What does being a global giant mean in iron and steel?
In 2006 global production of steel was 1.25 billion tons. This represents an increase of 98 million tons compared with the previous year. China accounted for 64 percent of this and produced 418 million tones of raw steel. It is China which is a giant. I mean, it dominates global steel production. Excess production in China meant that it exported 38 million tons. Such a volume has an impact on the entire global steel market. Turkey produced 23.3 million tons and ranked eleventh.

You see, Turkey produces 23 million tons. China exports its surplus of 38 million. Turkey is one of the markets to which it sells. In 2005 it sold 25,000 tons to Turkey. This rose to 165,000 tons in 2006. This will continue.

* Some companies set their targets globally, others in regional terms. Does your company have similar long-term targets?
Our strategies are as follows: The first is the short-term target of completing our investments and increasing our capacity to 5.3 million tons. The second is to complete our investment projects at İsdemir and raise our capacity to 3.5 million tones of flat steel. We shall complete these at the end of 2008.

There is a storm coming. We can see it. I mean consumption is rising. We are also increasing our output and investments. This will also heat up the markets. There are always changes in the iron and steel markets. We are preparing for this war in time of peace. As a result, our first target as a group is to cross this bridge in one piece. We need to be strong financially.

When we reach that point, a global giant really will be born in Turkey. Because that tonnage, technology and output will put us in a position where we can pressure every company and every country in the world. We shall be a powerful company. We are already a global company in terms of market book value and labor hours and energy consumption. When we add İsdemir as well, the completion of our first target, which involves the projects to increase capacity, shall make us a global company.

Ebru Firat
[email protected]